Lenders plan to push up LTVs

Lenders have told the Bank of England that they expect to release higher LTV deals over the next three months.

The Bank regularly polls lenders about lending conditions over the past three months and the next three months and compiles the results quarterly as part of its Credit Conditions Survey.

The latest survey for Q1 shows that lenders say credit availability has increased for borrowers with high LTVs, though say availability of lower LTV deals has remained stable.

A net balance of lenders reported that maximum LTV ratios had increased for the second consecutive quarter, and lenders said they expected a further small increase in maximum LTV ratios in Q2.

Maximum loan-to-income multiples were said to have been broadly stable between January and March and lenders do not see this changing over the next three months.

Lenders also reported that arrears rates had fallen unexpectedly in Q1, though expect this level to remain flat until June.

Demand for purchase mortgages is forecast to increase over the next three months but lenders have told the Bank that supply of mortgages will remain unchanged for at least the next three months, as they don’t expect the housing market to improve significantly in the short-term.

Paul – you obviously don’t go back as far as I do because the maximum you could get in the ’70s was 90%. This was subject to you having saved a 10% deposit with the lender and you taking on a Mortgage Indemnity Guarantee for 15% of the value of the property. Stamp duty was payable on all purchases over £15,000 and there were very few houses cheaper than £15k. It is also true to say that mortgage payments were higher pro-rata to salary than they are now as mortgage rates were at 13-14%. Not only this but there was only one product available and that was SVR. An SVR hat was cosily cartelled amongst all lenders to be exactly the same.

The other difference between then and now was that a car was a luxury and we had to make do with an old rust bucket. All of my furniture was second hand and we had a B&W TV. There were no credit cards and you had to put down a despoit even if you wanted HP. There was no interest free credit and overdrafts weren’t permissable. The fact is that if you wanted to buy a house you had to scrimp and save and give up on any unnecessary items. That’s how your parents had to do it and that is what you need to accept will be the way forward.

Im not sure Paul is in the real world, comparing rent and mortgage payments just isnt the same. Ok maybe your paying around the same, but what about if the boiler breaks? Washing machine packs in? Pipes get blocked, with rent the landlord will pay, but with a mortgage its extra money you have to pay. Hope you dont give your clients that viewpoint?? As the comment below Paul says, Stop fine dining, Stop going out all the time, and concentrate on more money saving activities!

With regards to the comment about rent the problem you have just now is that you can get a tracker at under 5% with a 10% deposit. However the chances are that at some point rates will rise and this customer will pay more so pegging it simply to rent paid is not realistic.

Paul you really should try harder. Cut out all those expensive gizmos you buy, like iphones xboxes etc. Forget eating out evey weekend and guzzzling fine wine, it’s time to start saving. Frugal is the word – you’ll soon get that 20% deposit.

Save more? House prices will increase meaning the deposit required will get further and further away. What a ridiculous comment by anon 12.39. Go back as far as you like and there were 95% mortgages available, with 100% not out of the question. If an applicant can prove ability to pay then where is the harm in these deals? Rent will be costing the same as a mortgage in most cases so if rent can be met then so can the mortgage. Would you expect a lender to say to a client ‘you can clearly afford the rent of x per month, which will be the same with a mortgage. However to be on the safe side we expect you to pay the mortgage and save 15 – 20% of your property value in the next 12 month’? No you wouldn,t so why expect a credit worthy rent payer to do this. Ridiculous. We need to get away from LTV and get credit to the people who can and will pay it.

Save more – yeah that’s easier said than done. my partner and I earn decent wages but for us to save a 10% deposit it will take atleast 3 years. We’re not asking for it to be a nice and easy process but a little bit of flexibility wouldn’t go a miss….

Save more – yeah that’s easier said than done. my partner and I earn decent wages but for us to save a 10% deposit it will take atleast 3 years. We’re not asking for it to be a nice and easy process but a little bit of flexibility wouldn’t go a miss….